The matter of reorganization was set about at once. On January 1 a plan appeared, prepared, at least nominally, by a special committee chosen by the directors,[136] and backed by the well-known firms of Drexel, Morgan & Co. of New York and J. S. Morgan & Co. of London.[137] By its terms no mortgage senior to the second consolidated mortgage was to be disturbed save the first mortgage, which matured in 1897. The bonds to be dealt with were thus reduced to $41,481,048, besides which provision had to be made for the floating debt and for future capital requirements. The plan proposed to authorize a blanket mortgage of $70,000,000 at 5 per cent, of which $33,597,000 were to exchange at par for the 6 per cent second consolidated bonds and funded coupons thereof, $4,031,400 to exchange for the funded coupon bonds of 1885, and $508,008 for the income bonds. Of the balance, $6,512,800 were to be reserved to settle with the old first lien and collateral trust bonds, $15,915,208 to supply capital requirements in the future, and $9,915,208 to be offered for subscription in order to pay the floating debt. The new management did not conceive that these last bonds could be sold to advantage in the general market, but imposed as a condition of the exchanges as above that second consols, funded coupon, and income bonds should subscribe at 90 to the extent of 25 per cent of their holdings; hoping that the grant of the right of immediate foreclosure upon default would induce the second consols to come in. Both these consols and the funded coupon bonds of 1885, it may be remarked, were to be kept alive and deposited with the trustee for the protection of the new bonds. Stated in tabular form the distribution of securities was to be as follows: To acquire the existing second consols, $33,597,400 To acquire the funded coupons of 1885, 4,031,400 To acquire the income bonds, 508,008 For subscription as above, 9,915,208 To acquire the old reorganization first lien and collateral trust bonds, 6,512,800 To be expended for construction, equipment, etc., not to exceed $100,000 in any year, except that $500,000 might be used to acquire existing car trusts, 15,435,184 ----------- Total, $70,000,000 The new mortgage was to cover the property of the New York, Lake Erie & Western, including its leasehold of the New York, Pennsylvania & Ohio, and the capital stock of the Chicago & Erie Railroad.[138] There was to be no assessment, no syndicate to raise money, and no voting trust.